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Management Science BUS 340

Management Science BUS 340. Chapter 3 Problem 3-18. (a) What decision model should be used?. Answer: Ken Brown should use the Maximize Expected Monetary Value (EMV) model. (b) What is the optimal decision?.

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Management Science BUS 340

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  1. Management ScienceBUS 340 Chapter 3 Problem 3-18 Kelly Devilbiss

  2. (a) What decision model should be used? Answer: Ken Brown should use the Maximize Expected Monetary Value (EMV) model. Kelly Devilbiss

  3. (b) What is the optimal decision? Kelly Devilbiss

  4. (c) Ken believes that the $300,000 figure for the Sub 100 with a favorable market is too high. How much lower would this figure have to be fore Ken to change his decision made in part (b)? Solve for x: .70x – 200,000(.30) = 145,000 .70x – 60,000 = 145,000 .70x = 205,000 205,000 / .70 = 292,857 Answer: $292,857 (or $7,143 lower) Kelly Devilbiss

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